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Capital Planning and Analysis

Uncertainty regarding the timing and speed of economic recovery continues to underscore the importance of capital adequacy. As boards of directors look for ways to increase the resilience of their companies, supervisory agencies have also stepped up their scrutiny of banks’ and other financial service providers’ internal capital assessment and planning processes.

The concept of capital adequacy has evolved from a point-in-time measurement for short-term solvency to a planning and risk management approach critical to managing the ongoing health of an organization. This shift requires thinking about capital management over a longer time horizon and in a more dynamic context. Examiners expect an organizations' business plans to be supported by a robust capital planning and management framework.

Promontory has the experience and resources to provide comprehensive expertise on capital planning and management. Our teams are composed of former leaders of major regulatory agencies, including the U.S. Treasury, Federal Reserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Financial Services Authority (United Kingdom). Our teams also include former executives of top private-sector institutions such as Goldman Sachs, JP Morgan Chase, Smith Barney, HSBC, Bank of America, Wells Fargo, Citigroup, and others. Our experts’ deep knowledge of the industry allows for the development of bank improvement programs consistent with best-in-class capital management solutions.

Promontory’s Capital Planning and Analysis services fall into three broad areas of expertise:

Representative Engagements

Promontory was retained to conduct an evaluation of a bank’s credit portfolio, specifically with regard to valuation techniques utilized on asset-backed securities. Promontory reviewed the bank’s existing models and developed and assisted with the implementation of new models.
An international bank engaged Promontory to determine the optimal capitalization and tax structures for its operations in the U.S., including its agencies in New York and Los Angeles.
Promontory valued a large portfolio of commercial real estate whole loans owned by a large Japanese financial institution. The valuation consisted of both a fundamental analysis and best judgment of market spreads. The fundamental analysis was the main driver of the valuation at a time when market spreads were volatile and unreliable. We performed a detailed qualitative credit review (QCR) of each loan and used the results of the QCR to inform the valuation model through use of a metric.

Capital Planning and Analysis

Representative Engagements

Key Contacts

Experts

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